Hold Mahindra & Mahindra Financial Services; target of Rs 320: Edelweiss

Edelweiss' research report on Mahindra & Mahindra Financial Services

Mahindra & Mahindra Financial Services’ (MMFS) Q4FY17 PAT at INR2.3bn came lower than estimate on higher provisions. Though GNPLs are optically lower at 9% (>11% in Q3FY17) –a seasonal trend, this quarter it was more to do with higher write-offs.

Outlook

It is perplexing that stock, wherein earnings trajectory has been weak with series of downgrades during down cycle, still retains premium valuations. MMFS’ consequent vulnerability keeps us guarded; moreover, valuations at 3.2x FY19E P/ABV capture near-term cyclical uptick. Hence, maintain ‘HOLD’.